Interlink Forwarding - Frequently Asked Questions

Frequently Asked Questions

Let us Answer your Questions

  1. What is a non-asset based logistics providers?
  2. Does hire a freight forwarder relieve me of compliance responsibilities?
  3. Why should I hire a freight forwarder?
  4. What is "General Average"?
  5. How are carriers liable for lost or damage goods?

Q. What is a non-asset based logistics providers? Back To Top

A: Advancements in technology and the associated increases in supply chain visibility and inter-company communications have given rise to a relatively new model for third party logistics operations – the “non-asset based logistics provider.” Non-asset based providers perform functions such as consultation on packaging and transportation, freight quoting, financial settlement, auditing, tracking, customer service and issue resolution. However, they do not employ any truck drivers or warehouse personnel, and they don’t own any physical freight distribution assets of their own – no trucks, no storage trailers, no pallets, and no warehousing. A non-assets based provider consists of a team of domain experts with accumulated freight industry expertise and information technology assets. They fill a role similar to freight agents or brokers, but maintain a significantly greater degree of “hands on” involvement in the transportation of products. To be useful, providers must show their customers a benefit in financial and operational terms by leveraging exceptional expertise and ability in the areas of operations, negotiations, and customer service in a way that complements its customers' preexisting physical assets.

Q. Does hire a freight forwarder relieve me of compliance responsibilities? Back To Top

A: Primary responsibility for compliance with the Export Administration Regulations (EAR) falls on the "principal parties in interest" (PPI) in a transaction. Generally, the PPIs in an export transaction are the U.S. seller and foreign buyer. Therefore, when hire a freight forwarder, you should choose one who is authorized and experienced in your market.

Find a reputable freight forwarder, build relationship with them, and trust them to take care of your freight and keep you in compliance.

Q. Why should I hire a freight forwarder? Back To Top

A: Depending on the product and shipping destination, there may be numerous barriers that have to be overcome to ship the product to the end customer. The freight forwarder is hired to get the product to the customer by a specific date and in an undamaged state. The freight forwarder will provide the client insurance services to make sure that if the items do arrive damaged, they will be reimbursed and not liable for the damages. A freight forwarder can provide the exporter with guidance on packaging, labeling, and necessary documentation as well as liaise with the transportation companies required to get the items to the customer.

It's important to remember though, that cost isn't the only factor. If something gets stuck in customs because the shipper doesn't have the know-how to get it out, or isn't inclined to help because they don't know you from Adam, you might lose an order completely. In general, we'd rather pay for the peace of mind of knowing it'll get there when it's supposed to."

Q. What is "General Average"? Back To Top

A: General Average is a legal principle of maritime law. A General Average occurs when a voluntary sacrifice is made to safeguard the vessel, cargo or crew from a common peril (e.g., jettison of cargo to extinguish a fire). If the sacrifice is successful, all parties contribute to the loss based on their cargo’s value.

General Average claims require all cargo owners on a vessel to contribute to the loss. Even if your cargo isn’t damaged, you still need to make a financial contribution (based on the total value of the ship’s cargo) for your goods to be released. Here’s how it works:
Value of vessel = $60 million
Value of cargo = $140 million
Total value of voyage = $200 million

  • Assume cargo loss and vessel repairs total $20 million.
  • Therefore, $20 million out of $200 million, or 10%, of the voyage suffered a loss.
  • Each cargo owner must contribute 10% of the value of their cargo. Cargo will not be released until the shipper posts a guarantee. The guarantee must be in the form of a cash deposit, bank guarantee or bond.

Q. How are carriers liable for lost or damage goods? Back To Top

A: Carriers do not pay claims unless they directly cause or contribute to the loss. Even when carriers are legally liable for loss or damage, however, the amount they will pay is limited based on the mode of transport.

The Carriage of Goods by Sea Act (COGSA) governs carrier liability for goods shipped via ocean to/from the United States. Recovery is limited to $500 per customary freight unit, and only when the carrier is negligent. A “freight unit” can vary from one container to one pallet.

International Air
For air carriers, two liability conventions exist. The Warsaw Convention limits liability to $9.07 per pound or $20 per kilogram. The Montreal Convention (used in the United States), changed this limitation to 19 Special Drawing Rights (SDRs), or about $30 per kilogram.

Many domestic air, intrastate road carriers and warehouse operators limit their liability to $0.50 per pound or $50 per shipment, based on their bill of lading or warehouse receipt. Interstate truckers are governed by the Carmack Amendment, which dictates full value, but allows for limitations of liability in bills of lading, tariffs or contracts. Some carriers will also have inadequate or no liability insurance and may be unable to fund a loss out of pocket.

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